Client has been caught misdeclaring takings (a pub) for a number of years and HMRC have completed their enquiries, resulting in massive tax and NI liabilities the client has no grounds to dispute and cannot pay.
However throughout the process the issue of underdeclared output VAT has never been addressed. Not a word from the Customs side of the organisation, no mention of VAT due (and how it would be collected) from the Revenue officer dealing with the case
HMRC want a 'negotiated' settlement of the tax and NI but it's as though the VAT shorfall belonged to another country.
What happened to joined up tax collection - I thought it was now HM Revenue AND Customs?
Clearly the client - even if they had the funds - can not deal with the 'HMR' side of things while there is a VAT sword of Damaclese hanging silently over them. This is not the first time I've seen this lop- sided approach - is it normal?
Gerard Somers
Replies (7)
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Three Year Rule?
Perhaps Customs & Excise have been caught by the three year rule? I assume of course that this business has been VAT registered for years. That said, the sharing of information between Revenue & Customs Officers is still very poor indeed in our area of the country. Will they never grow up?
I'm not an expert.....
.......on the topic, Gerard, but am pretty certain you need to make that ML report.
It is legally totally irrelevant whether "the authorities" know about it or not - stupid though that be. The law is an [***], which unfortunately is hardly a revelation.
Even were the client's mistake wholly innocent originally, he is now knowingly taking no action to correct it, and is self-evidently gaining financially from it.
I think that makes a cast-iron need for a report, albeit happy to be told otherwise by any experts out there.
MLR anyone?
Gerard
Direct answer : yes, it is normal at present. Lots of folk will rue the day when it becomes abnormal.
Indirect observation:
Is it the case that your client has agreed he has under-declared sales?
Is it the case that your client has declined to disclose underpaid VAT and make the payment?
In which case, do you not have a ML reporting problem?